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M.C. Chegganmull Sowcar Vs. Desur Manicka Mudaliar - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1926Mad792; 94Ind.Cas.384; (1926)50MLJ242
AppellantM.C. Chegganmull Sowcar
RespondentDesur Manicka Mudaliar
Cases ReferredSeymur v. Pickett
- - it would have been entered in all other ledgers like that. i am satisfied that he has been honest throughout this that notice, the payment of rs. 1,000 on 5th january was not mentioned as a payment towards the suit notes. but it cannot be necessarily inferred from this that the amount must have been credited towards the third note. there are other alternatives. the amount might have been kept in suspense or one might imagine that it was a mere piece of omission as ex. d already shows that the vakil committed other mistakes. in ex. vi the defendant mentions to plaintiff that that amount was sent towards the suit pronotes. this is the first occasion on which an appropriation known to both parties is stated. mr. tirunarayana-chari contends that a debtor can intimate the appropriation he desires only along with the payment or so immediately after it as to form part of the same transaction and cannot.....

Ramcsam, J.

1. This appeal arises out of a suit to recover money due on two promissory notes. The plaintiff is the appellant before us, the learned trial Judge having dismissed the suit except as to Rs. 800 admitted due by the defendant and deposited by him in Court. The suit was filed on the 24th of January, 1923, under the summary procedure. The defendant applied for leave to defend in February. Leave was granted on the 5th of March and the written statement of defendant was filed on the 15th of March. The two suit promissory notes are dated 17th December, 1921 (Ex. B) and 22nd December, 1921 (Ex. A)and carry interest at the rate of Rs. 2-13-0 per cent per mensem. The plaintiff and defendant ordinarily reside at Tindivanam in the South Arcot District. On the 22nd of April, 1922, the plaintiff through his Madras vakil Mr. Mahadeva Aiyar sent 2. notice demanding the balance due on Ex. B(Ex. V). Two days after, the same vakil issued another notice, Ex. D, in which he mentions that he was really instructed by his client to demand the amount due on both the promotes but that one of them was omitted from the first demand by mistake and the mistake having been detected the second notice was sent. In the second notice he mentions that two amounts of Rs. 1,000 each were paid on 3rd February and 16th April. The defendant In his reply notice Ex. VI, dated 1st May, 1922, and in his written statement pleaded that besides the payments admitted by the plaintiff he made two other payments, viz., a sum of Rs. 1,000 on, 5th-January, 1922 and another sum of Rs. 700 on 22nd April, 1924. I shall first deal with the payment of Rs. 700. The defendant examined himself (D.W.1) and D, Ws. 2, 3 and 4 to prove this payment. D.W. 2 is Krishnaswami Aiyar, a clerk in the Firm of Srinivasa Aiyangar and Sons. He says his firm lent Rs. 1,200 to the defendant and that the defendant wanted it to give to some Marwari whose name he does not remember. D.W. 3 is Subramania Aiyar, a clerk in the Official Assignee's Office. He saw payment of some amount in hundred-rupee notes by the defendant to plaintiff at the gate of the High Court and he and D.W. 4 were present. D.W. 4 corroborates him. He does not know the number of notes, but he saw the counting by the plaintiff who said it was 7. Defendant himself swears that Rs. 700 was paid on 22nd April out of the Rs. 1,200 borrowed from Srinivasa Aiyangar and Sons. He sent word to the plaintiff who was living at St. Thomas Mount. The plaintiff has not gone into the box. His clerk produced the account books which will be referred to later on and he does not know anything personally about these transactions. The defendant's ledger (Exs. 1 and l-A) supports him. The result is, we must believe the evidence adduced for the defendant and find that this payment of Rs. 700 has been proved. It follows that the plaintiff is not an honest man.

2. The other payment of Rs, 1,000 is admitted by the plaintiff before us and also in the Court below at the time of trial. But his contention with respect to it is, that it was credited by him towards a third pro-note executed by the defendant to the plaintiff on 5th November, 1921, for Rs. 1,000 carrying interest at 2 per cent. The defendant in his affidavit (dated 23rd February, 1923) which he filed for obtaining leave to defend mentioned in para. 5: ' The account-book of the plaintiff himself may, if produced, substantiate the payment of the said sum of Rs. 1,700.' In the counter-affidavit of the plaintiff, para. 2, the plaintiff said: 'I deny that the defendant paid the sums of Rs. 1,000 and Rs. 700 referred to in paragraphs 4 and 5 of the affidavit and say that the said payments are absolutely false. ' This statement of the plaintiff is now sought to be explained by his Advocate as meaning that the payments towards the suit pro-notes were meant to be denied and not the fact of payment itself so far as the payment of Rs. 1,000 is concerned. Even with this explanation, as far as the payment of Rs. 700 is concerned, I have already found that the statement must be false. As to the other payment, seeing that the defendant who sent the amount through his son, who signed in the plaintiff's account book, and who must have informed his father of the entry, refers to the fact of entry in the account book in paragraph 5 of his affidavit and that the plaintiff himself relied on such account books at the trial to prove the credit towards another pro-note, I find it difficult to believe that the plaintiff, assuming that he is dishonest, meant to deny the payment of Rs. 1,000 on 5th March, 1923. It seems to me unlikely that he meant to deny both payments on 5th March and afterwards in August during the time of trial meant to admit one of them. It seems to me that the affidavit of the plaintiff who is a Marwari was drafted for him by a careless pleader or pleader's clerk and signed by him without realising its full import. I make these remarks not for the purpose of establishing that the plaintiff is an honest man and with the other finding he cannot be made honest.

3. but merely to know what the probability is. Whatever it may be, we have got the fact that he admits payment of Rs. 1,000 and the only question is, whether there is a legally binding appropriation of the payment towards another pro-note. This other pro-note was mentioned to the defendant in his cross-examination and he was asked to produce his day book of that date. But he said he has not got it. The day book produced by him begins from 21st November, but its non-production is immaterial. He admitted the pronote after he was shown the entry in the plaintiff's book signed by the defendant's son He said: ' This pronote amount was not borrowed for my business. You may look into my account. The entry is signed by my son Ramalingam. I might have borrowed another amount from the plaintiff on 5th November, 1921 (By Court): I did borrow it. I have been keeping separate ledgers. There is a ledger prior to the one! I have filed in Court but it belongs to my own business while the one I have filed belongs to the joint business. Prior to November, 1921, I have got a day book for my own business. There is also a ledger page maintained for my dealings with the plaintiff for that period. The balance due on that ledger has been brought over to this ledger. It would have been entered in all other ledgers like that. That is paddy business, joint business, and this is ground-nut business. In regard to my own business there would have been nothing there prior to November, 1921, and so it would not have been brought forward.' This deposition shows that the defendant admitted the pronote of 5th November, 1921, after some hesitation, but suggests that it is connected with some joint business which is a paddy business. He does, not say who the other partner is, nor does he say that the pronote was signed by himself and the other partner. Nor does he say that the plaintiff knew it was a business joint between defendant and another. I do not suggest by referring to his hesitation that the defendant is dishonest. I am satisfied that he has been honest throughout this case. But he hesitated at first probably because he was afraid that the entry signed by his son may bind him as an appropriation towards the other note. The defendant's son was examined as D.W. 5. He was in school in the year 1921. He says his father gave him Rs. 1,000 and he paid it to the plaintiff but did not get any document or pronote. In cross-examination he admits his signature under the entry in plaintiff's day book, Ex. C, which shows that the amount of Rs. 1,000 was credited towards the pronote of 5th November, 1921. He was then asked: 'Q. You told your father what you wrote here? A. No.' This question suggests that he wrote the whole entry. It is true that the question is a double question and that double questions are not generally fair to witnesses. But seeing that the question was not objected to either by the witness or by his vakil Mr. Govindachari and seeing it is a very simple question which is not apt to confuse a witness, I think it is clear to me that neither the witness nor the defendant's vakil meant to suggest that the entry was not written by the witness. The only other alternatives are that the entry was written by some other person but signed by the defendant's son or there was no entry then but the bare signature of the witness taken then and there was an interpolation afterwards. There is no re-examination of the witness suggesting such interpolation. Nor did Mr. Govindachari seriously suggest before us, though 1 put the suggestion to him, that the entry was interpolated afterwards. I cannot imagine that the Judge and the practitioners on either side were thinking that they were exhibiting the signature of the witness only as an exhibit, for, such exhibit is of no use in the case. I think all understood in the Court below that the whole entry with the signature was meant to be exhibited and that effect of the entry made by the plaintiff but not communicated to the defendant. Mr. Tirunarayana-chari, the learned Advocate for the plaintiff, contended that the notice, Ex. D, may be taken to be a notice of appropriation towards the note of 5th November. But this contention cannot be accepted. Ex. D makes no reference to the pro-note of 5th November. It is true that, in that notice, the payment of Rs. 1,000 on 5th January was not mentioned as a payment towards the suit notes. But it cannot be necessarily inferred from this that the amount must have been credited towards the third note. There are other alternatives. The amount might have been kept in suspense or one might imagine that it was a mere piece of omission as Ex. D already shows that the vakil committed other mistakes. In Ex. VI the defendant mentions to plaintiff that that amount was sent towards the suit pronotes. This is the first occasion on which an appropriation known to both parties is stated. Mr. Tirunarayana-chari contends that a debtor can intimate the appropriation he desires only along with the payment or so immediately after it as to form part of the same transaction and cannot make his appropriation long after the payment. It is true that if the defendant does not intimate his wishes along with the payment there is a chance of the creditor making an appropriation and intimating to the debtor and thus shutting the mouth of the debtor for ever. But supposing the creditor has not made any appropriation, can it be said that the debtor cannot make the appropriation which he wishes, some reasonable time after, say, a week or a month or three months, It may be said that whenever he intimates such a wish after a reasonable interval it formed part of the same transaction as the payment. But should it be immediately after the payment? I do not see why it should be immediately after a payment. The words ' with an intimation ' in Section 59, Indian Contract Act, are not inconsistent with an intimation after a reasonable interval. So long as both have not made an appropriation, I do not see why the debtor cannot intimate the appropriation he wishes to the creditor later on. Mr. Tirunarayanachari, though he had first denied that a debtor cannot do this, practically conceded this in his argument. In such a case, he said, the creditor leaves it open. If once so much is conceded it follows that the essence of an appropriation is that it should be known to both parties and if not communicated by the creditor that it is left open, for, if we hold an uncommunicated entry in an account-book effective, an entry in an informal note-book or a loose piece of paper or even a piece of paper put in an envelope and secreted or even a bare mental resolution to appropriate in a particular way (sworn to by the creditor) would bind the debtor. In the case of regular account-books generally an extract of the accountbook is sent to the opposite party according to the custom in commercial circles. In The Mecca (1) cited by the appellant Lord Herschell said at page 292:

It is clear that if the appellants had merely entered in their own books an account such as was transmitted, it would not have amounted to any appropriation by them, and they would still have been at liberty to appropriate the payment as they pleased. It is equally clear, however, that when once they had made an appropriation and communicated it to their debtors, they would have no right to appropriate it otherwise. What, then, was the effect of bringing the items of debt into a single account, and transmitting it to their debtors in the manner they did?

4. This quotation shows that so long as the appropriation was not communicated to the debtor, the creditor can alter it afterwards, thereby showing that an uncommunicated appropriation is not complete as between both parties. If it is so complete, one cannot alter it. There seems to be an analogy between this, and the communication of an acceptance of an offer of a contract or a revocation. The principle seems to be that unless both parties have known the entry it is not complete as between both the parties. It is difficult to see why an uncommunicated appropriation in an account-book should be binding on the debtor but the creditor may be at liberty to alter it. At page 294 Lord Macnaghten says:

But it has long been held and it is now quite settled that the creditor has the right of election up to the very last moment,' and he is not bound to declare his election in express terms. He may declare it by bringing an action or in any other way that makes his meaning and intention plain. Where the election is with the creditor, it is always his intention expressed or implied or presumed, and not any rigid rule of law that governs the application of the money. The presumed intention of the creditor may no doubt be gathered from a statement of account, or anything else which indicates an intention one way or the other and is communicated to the debtor, provided there are no circumstances pointing in an opposite direction.

5. The use of the words ' express, implied or presumed, ' ' communicated, ' ' indicates an intention ' show that a concealed or secreted entry cannot satisfy the requirements laid down by Lord Macnaghten. In Simson v. Ingham 2 Barnewall and Cresswell, p. 65, 107 Ew 307Bayley, J. observed:

If, indeed, a book had been kept for the common use of both parties as a pass-book, and that had been communicated to the opposite party, then the party making such entries would have been precluded from altering that account.

6. See also Friend v. Young (1897) 2 Ch 421 and Smith v. Betty (1903) 2 KB 317 and Chitty on Contracts, pp. 851 and 852. In the present case, up to 1st May, 1922, neither party communicated his intention to the other. For the first time in Ex. VI the defendant mentioned that he paid the amount towards the suit notes. Within four months after the payment he repeated this in his affidavit of February, 1923. The plaintiff does not contradict it up to the trial. I do not see that we must infer that he accepted the defendant's wishes, for he was pressing his suit, but it seems to be a piece of foolish and meaningless cleverness in not stating his own appropriation up to the trial. Though I am not able to infer that the payment must be taken to be appropriated by the creditor towards the suit notes under the circumstances existing on 5th January, 1922, within the meaning of Section 59 of the Contract Act see Rameswar Koer v. Mahomed Mehdi Hossein (1898) 26 Cal 39 all the later circumstances up to the trial, I think, justify me in rejecting the plaintiff's earlier concealed appropriation as ineffective and in holding that the defendant's intimation in Ex. VI was reasonable in the circumstances and binds both the parties. This conclusion is not inconsistent with the expressions of Lord Macnaghten in The Mecca (1) or of Vaughan Williams, Romer and Stirling, L. JJ. in Seymur v. Pickett (1905) 1 KB 715 for the question whether the debtor may intimate if the creditor has left it open, did not arise and was not considered in these cases. At first I thought this conclusion is hard on the plaintiff for the suit on the other note would now be barred. On the other hand Mr. Govindachari pointed out that a suit for contribution by him against his partner will now be barred. The result is I excluded all questions of hardship from my mind in dealing with the case especially as I have no sympathy with the plaintiff. But I may now point out that suit on the other note by him will not be barred as the defendant's deposition in August 23 is an acknowledgment' of that note. Anyhow the plaintiff is not now entitled to recover Rs. 1,000. I have dealt with the case at great length just as the argument also took a little more than the usual time a case of this kind ought to have taken, because I was anxious to deal with the facts and the law only on the merits uninfluenced by the opinion which we have formed about plaintiff's honesty with reference to the other payment. It is admitted that the interest due to plaintiff is still due. The amount of interest was admitted also in Ex. VI in May, 1922. No arrangements were made for paying it up to the date of suit and even after the suit defendant deposited only the principal amount of Rs. 800 and not the interest, thus necessitating the appeal. But Mr. Govindachari contends for the defendant that the suit does not lie in Madras. He refers to Sections 68 and 69 of the Negotiable Instruments Act, and the suit notes mentioned ' in Madras or any place where you have your shop as the place of payment'. The only specified place is Madras. But the other clause might cover a number of other places. Mr. Tirunarayanachari argued that Sections 68 and 69 do not apply as more than one place is mentioned. But the word 'place' must be construed as including 'places' as it would be anomalous to require presentment if one place is mentioned but none if two places are mentioned. If more than one place is mentioned there must be presentment at one or other of those places. The demand by Ex. D does not amount to a presentment. The result is strictly the plaintiff has no right of action to sue without presentment but the defendant did not take the point in this shape, namely, that the plaintiff has no right to sue but raised only the question of jurisdiction. I do not see how these sections can help the defendant on the particular plea he has taken. The object of presentment seems to be to give the defendant an opportunity to pay, and until presentment no right to sue arises. But the Negotiable Instruments Act does not provide that after presentation at one of several places that one place to the exclusion of others is the place which determines jurisdiction for a suit. Nor do I find any such provision in the corresponding English Law, Section 87 of the Bills of Exchange Act. The section of the Civil Procedure Code which mentions the place of performance of the contract also as giving jurisdiction stands and is unaffected by Sections 68 and 69 of the Negotiable Instruments Act, an Act which has nothing to do with the questions of jurisdiction. I must, therefore, disallow the plea of the defendant, a plea which is important only on the question of costs. If the defendant's plea had been upheld we would disallow all costs to plaintiff while giving a decree for interest, but as it is by the defendant's waiver of plea of right of suit that the plaintiff is able to get a decree for the balance of principal and interest I must disallow plaintiff's costs in the Court below. But the defendant's omission to admit the interest or deposit has necessitated the appeal. I therefore award plaintiff proportionate costs on the amount of interest in appeal only. The result is, the plaintiff will have a decree for the amount of interest due up to the date of deposit of Rs. 800 in Court with further interest on it from the date of the Lower Court's decree at 6 per cent up to date of payment. Plaintiff will have proportionate costs in appeal only on such amount. He will pay defendant's costs on the rest of his claim throughout Phillips, J.: I. agree. On the question of jurisdiction I entertain some doubt, but I am not prepared to differ from my learned brother's opinion. I accordingly concur in the order proposed by him.

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